Fri February 15, 2013

Palestinian Authority Faces Severe Financial Crisis

The Palestinian Authority is facing a severe financial crisis. Israel has restricted payment of tax revenues to the Authority. That's in response to the Palestinians' successful bid for statehood status at the United Nations, something Israel strongly opposed. As NPR's Larry Abramson reports from Jerusalem, the money shortfall is hurting pocketbooks throughout the West Bank.

(SOUNDBITE OF CROWD CHATTER)

LARRY ABRAMSON, BYLINE: In a street outside government buildings in Ramallah, citizens of the West Bank gathered recently for a demonstration. They're among the nearly 200,000 civil servants holding temporary strikes, to protest working without pay.

WAFA HAMAYEL: Not this month, we've been with no salary since two months now.

ABRAMSON: Wafa Hamayel works at the Ministry of Planning. As a sound truck blasts music, she tells me she has four kids in private school. She's asking them for a tuition break, until things return to normal. Hamayel says she knows the PA's money problems are payback from the Israeli government, which withheld tax revenues after the Palestinian Authority made its statehood bid in November. She insists it's worth it.

HAMAYEL: We are strong fighters and survival, and we have to support the president in his decision to go to the U.N.

ABRAMSON: Just another clash between the Palestinians and the Israelis? The situation is not that simple.

UNIDENTIFIED MAN: (Foreign language spoken)

ABRAMSON: A man climbs into the sound truck, and reels off a list of those to blame for the crisis. The Israelis are at the top, then come the Americans. Congress is withholding about half a billion dollars in various funds. Then come the Arab countries, which have failed to pay up on hundreds of millions of dollars in pledges to the Palestinian Authority. And, he says through a translator, there's another culprit.

UNIDENTIFIED MAN: (Through translator) And fourthly, the Palestinian government which has not moved forward to provide for our salaries.

ABRAMSON: While few say they regret the decision to go to the U.N., many feel the government is wasting the funds it does have, and should have prepared for this situation. The Palestinian school system has been hit the hardest.

KOWTHAR ABRAHIM: (Foreign language spoken)

ABRAMSON: Kowthar Abrahim, a young mother of four, welcomes us to her home on the outskirts of Ramallah. She's home with her kids on a school day. Three are in government schools, which are closed to protest the failure to pay salaries. Abrahim herself is a teacher, so she too is on strike.

She's having trouble paying the mortgage she took out to pay for her house, because her husband, a cab driver, is also feeling the effects of the crisis.

ABRAHIM: (Through translator) Because students use taxis, employees use taxis, and now neither students, nor employees, are capable of going to work.

ABRAMSON: The Israeli government recently agreed to release tax revenues from December to the Palestinian Authority. But the Israeli's have made no long term commitments, and appear to be watching how the Palestinians behave. The PA has indicated it may take Israel to the International Criminal Court, to protest continued settlement building in the West Bank.

Israel views that threat, along with the statehood bid, as unilateral moves that violate the Oslo Accords and other agreements. Israeli government spokesman Mark Regev says, all these issues have to be negotiated.

MARK REGEV: Now the Palestinian side can't expect Israel to unilaterally keep parts of the agreement that they like, when they are openly violating, flouting, other aspects of the agreements.

ABRAMSON: There are vague hopes in the West Bank that a new government taking shape in Israeli will ease the pressure, or that the newly confirmed Secretary of State, John Kerry will help out. But things could get worse before they get better. The PA is also making moves to reconcile with Hamas, currently in control of the Gaza Strip. Israel and the U.S. consider Hamas a terrorist organization. That could mean, once again, that Palestinian salaries will be on the line. Larry Abramson, NPR News, Jerusalem. Transcript provided by NPR, Copyright NPR.